Tuesday, 9 Jun 2020

Written Answers Nos. 61-80

Credit Unions

Questions (64, 65)

Niall Collins

Question:

64. Deputy Niall Collins asked the Minister for Finance if concerns raised in correspondence by a person (details supplied) will be addressed; and if he will make a statement on the matter. [10073/20]

Brendan Griffin

Question:

65. Deputy Brendan Griffin asked the Minister for Finance if the Central Bank regulations on credit unions will be reviewed (details supplied); and if he will make a statement on the matter. [10101/20]

Written answers

Minister for Finance

I propose to take Questions Nos. 64 and 65 together.

First of all, I wish to inform the Deputy that both I and my officials have engaged extensively with the credit union representative bodies since the beginning of the COVID-19 pandemic.

I spoke with the credit union representative bodies, by conference call on 23 March 2020 and again on 22 April 2020 to discuss the challenges and emerging issues facing the credit union sector as a result of the COVID-19 crisis. I noted the vital work the credit union sector is carrying out, which builds on the government’s call for solidarity and community spirit which is synonymous with credit unions.

In addition to the above, my officials have had regular calls with the credit union representative bodies and with the Registry of Credit Unions in the Central Bank to review any emerging issues in the sector resulting from the pandemic, and to ensure smooth information flow between the sector and Government. The Credit Union Advisory Committee (CUAC) is also meeting regularly.

I recognise the key role that credit unions play in the delivery of financial services in local communities across Ireland, the need for which is heightened at this time. Credit unions account for approximately one third of the consumer credit market and are well positioned to provide access to credit to support the recovery from the current crisis.

In terms of the overall financial position of the sector, credit unions have come into this crisis with a strong reserves position, with a sector average reserve ratio of 16% as at 31 December 2019. This highlights that many individual credit union boards have chosen to prudently maintain additional reserves over the 10% regulatory minimum requirement. Credit unions have also maintained high levels of liquidity, with a sector average liquidity ratio of 39% as at 31 December 2019. Notwithstanding the strong financial position of the sector at December 2019, sustainability is a challenge for many credit unions.

Generally speaking, the current business model of Irish credit unions is suffering from low growth rates in loan demand over recent years (outpaced by stronger savings growth). Surplus funds not lent out to members yield limited investment returns reflective of the current low interest rate environment. This has translated into low loan to asset ratios (sector average 28%), low return on assets (sector average 0.6%) and high cost income ratios (sector average 82%).

The economic outlook arising by virtue of COVID-19, including reduced demand for new lending, has increased the challenges the sector is already facing. As a result it was agreed that the CUAC would report to me by 30 June on challenges and opportunities for the sector, incorporating implications of COVID-19, the role credit unions could play in the economic recovery and any relevant recommendations.

You may also wish to note that I have committed to a review of the Stabilisation Levy prior to introduction of the levies for 2021. As part of this review process the views of the credit union representative bodies will be sought and will help inform any decision I make. You may also be aware that a review of the Resolution Levy was completed in 2019, following which I made the decision to reduce the Resolution Fund levy for 2020, and that it is 44% lower than 2019. I will consider the Resolution Levy for 2021 this autumn.

The Central Bank also recognises the challenges being faced by many credit unions to continue providing services to members in light of COVID-19. The Central Bank has introduced some temporary flexibility for credit unions – alongside similar measures for other regulated sectors - in the areas of reporting deadlines and is taking a pragmatic approach to Fitness and Probity requirements where particular roles in a credit union may need to be filled on a temporary basis, as a result of COVID-19. The Central Bank has formally responded in writing to regulatory requests made by the representative bodies.

EU Legislation

Questions (66)

Michael McGrath

Question:

66. Deputy Michael McGrath asked the Minister for Finance the role of Ireland in relation to the support to mitigate unemployment risks in an emergency scheme proposed by the European Commission; if legislation is required here in order to put the scheme into effect; when such legislation is needed; and if he will make a statement on the matter. [10197/20]

Written answers

Minister for Finance

The Support to mitigate Unemployment Risks in an Emergency (SURE) instrument is intended primarily to support Member States with efforts to protect workers and jobs, and also support some health-related measures.

Under the proposal, SURE will provide financial assistance to Member States of up to €100 billion in total. The Commission will borrow on financial markets to finance the loans to Member States at the same interest rate, allowing Member States benefit from the EU’s strong credit rating and low borrowing costs. The loans are targeted to assist Member States to address sudden increases in public expenditure caused by the Covid-19 pandemic, in order to preserve employment (such as short-time work schemes and other similar measures put in place for the self-employed) and certain health expenditure.

SURE would come with safeguards to ensure fair and equitable access to funding for Member States, with no more than €60 billion available to any three Member States, under the proposal.

The loans will be underpinned by a system of voluntary guarantees from Member States. For a lending volume of €100 billion under the SURE instrument, €25 billion in guarantee commitments are required from all Member States collectively. This guarantee mechanism ensures Member States do not have to pay any money upfront. The instrument would not become available until all Member States sign up to their guarantee amount, and these commitments would remain in place for the full term of the loans which they are underwriting.

Each Member State contributes to the guarantee in proportion to its relative share in the total Gross National Income of the Union. For Ireland, this would be equivalent to €483 million (1.9% of EU-27 GNI).

SURE was adopted by ECOFIN Finance Ministers and published in the Official Journal on 19 May 2020. While the instrument is a regulation, which will have direct applicability in Irish law, signing the voluntary guarantee agreement, will require enabling legislation in Ireland. This requirement stems from Article 11 of the Constitution which provides that all the revenues of the State “shall be appropriated for the purposes and in the manner and subject to the charges and liabilities determined and imposed by law ”. As no Member State can access SURE funding until all Member States have signed the voluntary guarantee, the timeline for introduction of legislation is urgent. The Government have decided to commence drafting legislation on this matter with a view to publishing a Bill as soon as possible.

Question No. 67 answered with Question No. 54.

Wage Subsidy Scheme

Questions (68)

Michael McGrath

Question:

68. Deputy Michael McGrath asked the Minister for Finance if he will raise an issue regarding the temporary wage subsidy scheme (details supplied); and if he will make a statement on the matter. [10298/20]

Written answers

Minister for Finance

I am advised by Revenue that the initial difficulties experienced by the business in question in accessing the Temporary Wage Subsidy Scheme (TWSS) arose because it failed to file its February submission by 15 March 2020 in accordance with the legislative provisions set down in Section 28 of Emergency Measures in the Public Interest (COVID-19) Act 2020. The business was subsequently provided with access to the TWSS under the concessionary arrangements introduced by Revenue under its care and management provisions and has been in receipt of payments since late April. The business also received additional payments in error due to a combination of duplicate employee submissions and temporary technology difficulties with Revenue’s IT systems.

Revenue has advised me that these issues have been resolved and the business has been provided with access to the TWSS on a retrospective basis from 26 March 2020.

Covid-19 Pandemic Unemployment Payment

Questions (69)

Michael McGrath

Question:

69. Deputy Michael McGrath asked the Minister for Finance the expected tax due from the pandemic unemployment payment for 2020; the way in which the Revenue Commissioners plan to collect this tax; and if he will make a statement on the matter. [10313/20]

Written answers

Minister for Finance

Payments made under the Pandemic Unemployment Payment (PUP) Scheme are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages and payments made under the PUP scheme are subject to income tax. However, tax will not be collected in real-time while the scheme is in operation. This is in keeping with the Government’s intention to get much needed financial support into the hands of affected workers as quickly as possible.

I have been advised by Revenue that, at this stage, it is not possible to quantify the likely amount of tax to be received from persons in receipt of the PUP. This will require assessment at year end, to consider their length of time on the PUP Scheme, the amount of payments received, and any other income earned over the course of 2020. The taxation position will follow the general taxation rule for social welfare payments and, thus, while liable to income tax, the payments will be exempt from PRSI and the Universal Social Charge. This will be the case whether the recipient of the PUP is a former PAYE worker or a person who was previously self-employed.

While not liable to tax in real time under the PAYE system, the liability to tax on payments under the PUP Scheme will instead normally be determined by way of review at the end of the tax year. I am advised by Revenue that when an end of the year review takes place, it may be the case that an employee’s unused tax credits will cover any further liability that may arise as a result of taxation of PUP payments. Where this is not the case and should a tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year or future years in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing. I have been assured by Revenue that they will be adopting a fair and flexible approach to collecting tax due on payments made under the PUP scheme.

Covid-19 Pandemic Supports

Questions (70)

Michael McGrath

Question:

70. Deputy Michael McGrath asked the Minister for Finance if he has considered increasing credits in 2021 to cater for those that have received the temporary wage subsidy scheme or the pandemic unemployment payment and have income tax due from those payments; the estimated cost of such a measure; and if he will make a statement on the matter. [10314/20]

Written answers

Minister for Finance

I do not have any plan at this time to reconsider the existing tax credit arrangements that apply to all taxpayers in the manner suggested by the Deputy.

It is important to point out that the Temporary Wage Subsidy Scheme (TWSS), the Pandemic Unemployment Payment (PUP) already represent a very significant support to those who have may have suffered a loss of income arising from the COVID-19 crisis.

Income tax receipts account for around 40% of Ireland’s annual tax receipts, thereby making a significant contribution towards the cost of the various Exchequer funded State services, many of which are experiencing additional pressures at this time on account of the crisis we are facing as a result of the necessary response to the COVID-19 pandemic.

Ireland has a progressive income tax system which is structured such that the more income a taxpayer has, the more tax he or she will pay. As an individual’s income increases, they move up through the various rates and bands and, as a result, while the levels of take home pay increase overall, the amount of tax paid also increases. It follows that those with a lower income as a result of benefitting from the TWSS or the PUP will have a lower income tax liability than might otherwise have been the case.

Wage Subsidy Scheme

Questions (71, 72)

Michael McGrath

Question:

71. Deputy Michael McGrath asked the Minister for Finance the expected tax due from the temporary wage subsidy scheme for 2020; and if he will make a statement on the matter. [10315/20]

Michael McGrath

Question:

72. Deputy Michael McGrath asked the Minister for Finance the number of employers that have availed of the temporary wage subsidy scheme and that have paid PRSI at 0.5%; the amount received from employers from these PRSI payments; if an analysis has been undertaken to ascertain on average the number of employers that have topped up incomes from the scheme; and if he will make a statement on the matter. [10316/20]

Written answers

Minister for Finance

I propose to take Questions Nos. 71 and 72 together.

Regarding tax due from the temporary wage subsidy scheme for 2020 I am advised by Revenue that it is not possible to quantify at this stage the likely amount of tax to be received from employees in receipt of the Temporary Wage Subsidy Scheme (TWSS) supports. This will require assessment at year end of those who availed of the Scheme, to consider their length of time on the Scheme, the amounts of subsidy received and any other income earned over the course of 2020.

Regarding the number of employers that have availed of the temporary wage subsidy scheme and related PRSI payments , Revenue has published detailed TWSS statistics on a weekly basis. These are available at:

www.revenue.ie/en/corporate/information-about-revenue/statistics/number-of-taxpayers-and-returns/covid-19-wage-subsidy-scheme-statistics.aspx.

In particular, Table 3 of the statistics dated 28 May shows the available information on PRSI payments for employees on TWSS and Table 6 shows an analysis of the TWSS employees in receipt of additional payments from their employers.

Question No. 73 answered with Question No. 49.

Apple Escrow Account

Questions (74)

Michael McGrath

Question:

74. Deputy Michael McGrath asked the Minister for Finance the value of an account (details supplied); the amount that was originally deposited; and if he will make a statement on the matter. [10318/20]

Written answers

Minister for Finance

As the Deputy is aware, the alleged State aid from Apple has been recovered by the State. The total amount recovered was €14.285 billion which constitutes the principal amount as well as the relevant EU interest. These sums have been placed into an Escrow Fund with the proceeds being released only when there has been a final determination in the European Courts over the validity of the Commission’s Decision.

The 2018 accounts for the Escrow Fund were compiled and audited by the Office of the Comptroller and Auditor General. As at 31 December 2018, the value of the assets held in the Escrow Fund amounted to €14.271 billion. Once the 2019 accounts are finalised and approved it will possible to indicate the end 2019 financial position of the Fund. The accounts of the Fund are produced on an annual basis and no information will be provided on the value of the Fund outside this process.

Rainy Day Fund

Questions (75)

Michael McGrath

Question:

75. Deputy Michael McGrath asked the Minister for Finance the value of the Rainy-Day Fund; if there is consideration to avail of the resource; and if he will make a statement on the matter. [10319/20]

Written answers

Minister for Finance

The value of the National Surplus (Exceptional Contingencies) Reserve Fund (“the Rainy Day Fund”) as at 30 May was €1.5bn.

Given the scale of the impact on the economy of COVID-19 the Taoiseach has stated previously that the Rainy Day Fund (RDF) will be accessed as part of the Government’s response to the pandemic. The Stability Programme Update published in April set out that the Rainy Day Fund will be drawn down during the course of 2020. The exact timing of this drawdown remains to be decided as recent successful debt issuances by the National Treasury Management Agency means there is no immediate need for its drawdown.

When the drawdown of the Rainy Day Fund occurs, it will be to mitigate the occurrence of the exceptional circumstances arising from COVID-19 and it will be in accordance with section 9 of the National Surplus (Exceptional Contingencies) Reserve Fund Act 2019.

Covid-19 Pandemic Supports

Questions (76)

Michael McGrath

Question:

76. Deputy Michael McGrath asked the Minister for Finance if the pandemic stabilisation and recovery fund is established and operational; if it requires primary legislation; if the fund is to be used as a last resort; the person or body that controls the fund; the person or body that makes the decision to invest; if this is reserved solely for the Ireland Strategic Investment Fund; if he has an input in this regard; and if he will make a statement on the matter. [10320/20]

Written answers

Minister for Finance

The Pandemic Stabilisation and Recovery Fund (the “PSRF”), is a €2 billion sub-portfolio within the Ireland Strategic Investment Fund (the “ISIF”). The ISIF is managed and controlled by the National Treasury Management Agency. The PSRF requires no primary legislation as it will operate under the existing ISIF statutory mandate (investing on a commercial basis in a manner designed to support economic activity and employment in the State) within the framework set out in the National Treasury Management Agency (Amendment) Act 2014. The ISIF are currently engaging with enterprises that are at various stages of exploring potential investment from the PSRF.

The initial focus of the PSRF will be on enterprises with over 250 employees or with an annual turnover of in excess of €50million, which have been materially impacted by the COVID-19 pandemic. Such enterprises must demonstrate that the enterprise was viable pre COVID-19, and that it is expected to return to viability and to contribute to the Irish economy. Further, it should also be clear that ISIF investment, either alone or with co-investment, will be critical to supporting the enterprise in its return to financial viability. ISIF’s normal investment criteria also apply, in particular appropriate commercial return and economic impact remain core to the ISIF mandate. Further details have been published by the ISIF on the operation of the PSRF, these can be found on the ISIF website at https://isif.ie/.

Question No. 77 answered with Question No. 48.

Question No. 78 answered with Question No. 54.

Strategic Banking Corporation of Ireland

Questions (79)

Michael McGrath

Question:

79. Deputy Michael McGrath asked the Minister for Finance the number and value of loans provided by the Strategic Banking Corporation of Ireland in each month of 2020, by type of loan product in tabular form; and if he will make a statement on the matter. [10325/20]

Written answers

Minister for Finance

The information requested by the Deputy is set out in the following table.

Scheme	Number of loans sanctioned from 1 January to 4 June 2020	Value of loans
Future Growth Loan Scheme	667	€161,566,068
Brexit Loan Scheme	48	€7,068,000
Covid19 Working Capital Scheme	372	€45,676,500
Credit Guarantee Scheme	11	€3,304,000
Liquidity	856	€44,396,385.89
Total	1954	€262,010,953.9

The Strategic Banking Corporation of Ireland (SBCI) has provided information on the number and value of loans sanctioned under the various loan schemes from the 1st January 2020 to the 4th June 2020. The SBCI has informed the Department of Finance that they do not currently have this information available on a month by month basis. The SBCI releases data on a periodic basis and expects to release updated scheme data to the end of June in mid July.

Banking Sector

Questions (80)

Cathal Crowe

Question:

80. Deputy Cathal Crowe asked the Minister for Finance the plans for the reopening of closed branches of a bank (details supplied) in County Clare and nationally. [10333/20]

Written answers

Minister for Finance

As the Deputy is aware, I have engaged and will continue to engage, extensively with the Banking and Payments Federation (BPFI) and the banks directly in relation to supports for personal and business customers affected by the COVID-19 crisis. Furthermore, officials in my Department are alert to issues raised directly by the public and these inform the Department’s ongoing engagement process and policy formation. All the banks, Bank of Ireland included, have continued to evolve and expand the supports they have available and I would expect that this process will continue.

Bank of Ireland has introduced a wide variety of solutions designed to help both personal and business customers affected by the COVID-19 crisis including mortgage breaks, cash flow supports for businesses and banking arrangements for customers who are cocooning/self-isolating.

The Deputy may also be aware that as Minister for Finance, I am precluded from intervening in how Bank of Ireland manages its day-to-day business and relationship with any of its customers. Decisions in this regard are solely the responsibility of the board and management of the bank which must be run on an independent and commercial basis. The independence of the banks in which the State has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.

Notwithstanding this, officials in the Department have requested a comment from Bank of Ireland in relation to the manner in which it is managing its branch network during the current crisis and have received the following response:

“Due to COVID-19 Bank of Ireland has made a number of operational changes to safeguard critical services during the pandemic, respond to a significant shift in how customers are banking, and support social distancing requirements.

"To safeguard critical services we prioritised one hundred and sixty one of our larger branches nationwide, as well as our contact centres and online banking which have seen a surge in use over recent months. One hundred and one mainly smaller locations, which had seen a sharp drop in usage, were closed. Colleagues from these locations have been supporting our contact centres and online services manage high volumes of requests, as well as our larger branches where social distancing can be better maintained.

"We’re continuing to see shifts in customer behaviour towards online banking channels, and social distancing requirements remain in place. Our focus therefore remains on protecting the prioritised services across one hundred and sixty one branches, telephone and online banking, while keeping all developments under active review.”